Funeral Plan Trusts
Avalon currently operates four trusts “Avalon Funeral Trust 1, 2, 3 and 4” each of have been established by a written instrument and is governed by trust laws. As an FCA regulated entity, Avalon must also comply with the rules around trusts that are detailed in the Financial Services and Markets Act 2000, which sets out the legislation that applies to funeral plans.
The trust uses its scale to efficiently invest through recognised investments funds. The funds within the trust are invested to ensure that rising costs (inflation) associated with providing the services under the funeral contract can be met when they fall due on enactment of the plan at the time of need. The trusts are managed by independent trustees and the investments managed by third party investment specialists under the direction of the trustees.
In order to protect against the volatility of investments the trusts seek to maintain at least a 10% surplus over and above the costs of delivering the services in line with the FCA guidance. These costs are updated for inflation and assessed annually by an independent actuary in line with FCA regulations.
Subject to professional advice and guidelines and the Trust being over 10% in surplus, Avalon may receive additional amounts from the Trust. These payments are signed off by independent trustees who ensure that the Trust retains sufficient funds to meet its obligations to all our plan holders. Avalon do not receive any money from the trust unless it is funded to over 110% of required funds to provide your funeral in the future. If the trust is funded to over 110%, we receive an amount from the trust for every plan we sell to cover our reasonable administration overheads and expenses of running the business for each plan.
The amount Avalon receives is contingent on the above funding rules and can vary subject to the maximum amounts per plan. These maximums are the amounts certified by the actuary to ensure we always have sufficient funds retained on trust to provide the funeral services at time of need. This is not a fee or a charge to you and any amount you pay to us is fully refundable, subject to the cancelation terms of your plan.
The table below compares the plan price to the estimated cost of purchasing an equivalent funeral at the price of need if purchased today, as well as disclosing the average wholesale price Avalon pays and the maximum amount Avalon can receive per plan, subject to the above funding rules.
We retain a maximum amount per plan (see the table below), from the price paid by you for your Plan to cover our expenses and to provide for the administrative costs of running the business for the life of each Plan. The balance is placed and safeguarded in an independent UK Trust fund and held in order to pay the Appointed Funeral Director and other costs of the agreed funeral.
At time of sale, Avalon will allocate your plan to a specific Funeral Director(s) and have negotiated a wholesale price for the costs of provision of your funeral. These costs to Avalon can vary, for example, by region and plan type. Unlike the plan price you pay which is fixed, the at need price today is likely to rise with inflation each year until you need a funeral. These wholesale costs to Avalon are also uplifted for inflation each year.
* All UK core plans, and European Repatriation plans for burials include a 1,000 GBP disbursement allowance with an annual uplift for inflation.
Should the Trust Fund be wound up, which would be extremely unlikely, and your plan has not been used to provide a funeral or been cancelled, you would receive a share of the Trust Fund as determined by the Actuary to the Trust.
Financial Services Compensation Scheme
In the unlikely event of failure of Avalon there will be a reasonable likelihood that your funeral plan contract will be transferred to and continue to be carried out by another regulated funeral plan provider but that could potentially generate extra costs for you.
In the event that the relevant funeral plan contract will not continue to be carried out by us or another firm then you will receive a payment corresponding to your balance, but this may not be the full amount you’ve paid in.
Avalon are a member of the Financial Services Compensation Scheme (FSCS). Should Avalon be unable to meet its liabilities, you may be entitled to compensation from the compensation scheme.
Further information about the scheme is available on the FSCS website: www.fscs.org.uk
